May, 2018: Toronto & GTA MLS® home sales: Sales Down; Inventory Up

Toronto, Ontario, June 4, 2018 - The Toronto Real Estate Board’s [TREB] MarketWatch monthly stats report was released this morning showing that Realtors® in Toronto and the Greater Toronto Area overall - meaning all house & condo types in all TREB areas - reported a 22.2% drop in the number of residential property sales through TREB’s MLS® system last month to 7,834 units. Due to the seasonal nature of residential real estate, all figures herein are year-over-year [YoY] comparisons unless otherwise noted. The overall average selling price of those homes was also down by 6.6% to $805,320.

May, 2018 in the GTA saw a very fragmented residential housing market in terms of sales activity by area with some GTA pockets and neighbourhoods remaining very hot - including a significant resurgence of multiple-offer situations - while listings in some areas languished on the market with less-than-robust activity…and, often, resultant price reductions.

Bungalows remain a Hot Commodity

If you were selling a Freehold Bungalow in Etobicoke’s “Toronto W08” district, for example, on average you only needed 12 days to sell, and it sold for 101% of asking. That Central Etobicoke area saw 23 Freehold Bungalow sales reported at an average of $1,103,910, and 48 newly listed in May. In comparison, the same Bungalow up in Auroratook 65 days to sell [yeah…we went back & double-checked that!] and went for 95% of asking at a sale price of $1,368,667. Six were sold and 30 were newly listed.

A year earlier, that Etobicoke Bungalow sold in 9 days for $1,056,133 [107% of asking]. There were 42 sold and 91 newly listed. The story in Aurora at that time was 17 DoM for $1,224,994 [104% of asking]; 17 sold and 37 newly listed.*

It’s also interesting to note that in a market where the overall average price dipped YoY, Freehold Bungalow sale prices - in those two areas at least - were up YoY, +4.5% in the Etobicoke district and +11.7% in the Town of Aurora. Apparently Bungalows remain very popular.

The Take from the Board

“Supply of homes available for sale continued to be an issue”, according to the report, citing 26.2% fewer new listings versus May, ’17, combined with the drop in the number of sales…the net result being more competition between buyers. As noted above, those conditions were not by any means consistent across the GTA. Further, the Total Active Listings [TAL] figure - which we’ve oft contended is at least as important as the New Listings figure - was significantly higher at 20,919 homes on the market compared to 18,477 at the end of last May [+13.2%]. Another factor to consider is the spike in new listings LAST May [+48.9%; TAL +42.9% vs May ’16] in the wake of the Wynne government’s Fair Housing plan announced late in the previous month.

The Board’s Director of Market Analysis, Jason Mercer, added in the Report, “Market conditions are becoming tighter in the Greater Toronto Area and this will provide support for home prices as we move through the second half of 2018 and into 2019. There are emerging indicators pointing toward increased competition between buyers, which generally leads to stronger price growth. In the City of Toronto, for example, average selling prices were at or above average listing prices for all major home types in May.”

Survey & Study: The GTA Residential Market

Trying to get a feel for where the residential real estate market’s headed in the coming months, TREB contracted Ipsos to conduct a survey. Ipsos reported that the intent of GTA homeowners to list their properties is “down markedly” since the Fall of 2017. Apologies: We haven't seen the actual report, but we'll link it here if and when we do.

The Canadian Centre for Policy Analysis also conducted a study for TREB and they concluded that many Ontarians are “over-housed”: They’re living in houses with a cumulative total of over five million “extra bedrooms”. TREB President Tim Syrianos says in the TREB Report, “These people don’t list their homes for sale, because they feel there are no alternative housing types for them to move into. Policy makers need to focus more on the ‘missing middle’ – home types that bridge the gap between detached houses and condominium apartments.”

Well…partially, anyway. While those would-be downsizers are, obviously, a component of such “over-housing,” there are other obvious components that go unmentioned in the TREB report [and there’s no link to the original]…for example:

there’s still spec buying in the GTA. Who knows to what degree some of those houses are occupied...

there are still lots of “pre-April-2017” spec-ers who are “under water”: They'd lose money if they sold today...so they sit and wait...hoping the price bounces back.

there’s also simply a lot of owner-occupied “over-housing”, purchased and “under-occupied” for speculative reasons and/or growing family reasons.

there are other potential members of this “over-housed” group…with high house prices, for example, people letting out spare bedrooms and not reporting rent; even dividing houses and not reporting the “sub-letting”. It isn’t clear from the TREB report whether the “People don’t list their homes…” conclusion is that of the CCPA report or otherwise.

A Quick Look at the #’s…

In Metropolitan Toronto - “The 416” - 782 Detached homes sold, down 30.4%, at an average sale price of $1,426,094, off 5.6%. In “The 905" - the balance of the GTA - 2,562 Detached homes sold last month, down 27.9%, at an average sale price of $929,401, down an even nine percent.

MLS® sales of Condo Apartment continued their stumble…down 13.8% in Metro Toronto to 1,745 units and down 19.9% in the balance of the GTA to 648 units. Prices remained in the black YoY, though: The average sale price of the Toronto units was $602,804, up 6.5%, and the average in the balance of the GTA was up 1.2% to $455,413.

It took “81.8% longer” to sell the average GTA home in May at 20 Days on Market [DoM] versus 11 days last May.

May’s Total Active Listings divided by the month’s Total Sales indicates Forward Inventory of 2.67. Pretty normal by histortical standards. The “Absorption Rate”, which is calculated by dividing the month’s number of sales by it’s number of new listings, stood at .412 which merely implies that about 41.2% of new listing inventory coming onto the market would be sold [“absorbed by the market”] in one month at that rate of monthly sales.

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